The U.S. Federal Communications Commission has approved a proposal to let Dish Network offer its own smartphone service to consumers, setting up the second-largest satellite-TV provider to compete with mobile-phone giants such as Verizon, the industry leader, and AT&T, the second largest.
Dish has built up its spectrum holdings as it seeks to decrease its reliance on the satellite-TV business, which is losing subscribers amid a rise in streaming video alternatives and other ways for consumers to avoid hefty monthly TV bills.
FCC Chairman Julius Genachowski's proposal to regulate Dish's airwaves use cleared the commission on a 5 to 0 vote, according to a statement emailed yesterday by agency spokesman Justin Cole.
Dish did not get everything it wanted, however: The company had objected to the proposal's requirement that limits power for its planned network, saying that would cripple its ability to enter the wireless business. The requirement was intended to prevent interference with government-owned frequencies known as the H block, which is slated to be auctioned.
"The commission has taken an important step toward facilitating wireless competition and innovation," Jeff Blum, Dish senior vice president and deputy general counsel, said in an emailed statement after the vote. "Following a more thorough review of the order and its technical details, Dish will consider its strategic options and the optimal approach to put this spectrum to use for the benefit of consumers."
"No matter how you slice it, this is a transformative outcome for Dish to expand beyond its pay-TV business," Paul Gallant, Washington-based managing director at Guggenheim Securities, said in an interview. "Even if Dish loses the spectrum interference battle it's been fighting, it still got most of what it wanted from the FCC."
Sprint has approached Dish in recent months about a potential partnership that would allow the satellite-TV company to offer mobile-phone service over Sprint's network, with Sprint getting access to Dish's mobile airwaves, according to two people familiar with the matter, who asked not to be named because they aren't authorized to speak publicly.
Sprint called the commission's move "a balanced and equitable decision," according to an emailed statement last night from the Overland Park, Kansas-based company.
"By allocating this spectrum for commercial broadband use, the Commission is helping to bring more wireless broadband directly to consumers," Larry Krevor, Sprint's vice president for government affairs, said in the statement. "This will promote economic growth, investment, innovation and increase the economic competitiveness of the U.S."
An earlier attempt by Mr. Genachowski's FCC to designate satellite airwaves for smartphone use foundered.